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19 April 2009

Though voice still remains the money spinner, telecom operators and handset makers are betting big on services to acquire the next 400 million customers. Kushan Mitra goes into the details.

COVER STORY

The next 400 million

Kushan Mitra

April 16, 2009

Sitting in a small room, 250 km from Pune in the heart of rural Maharashtra, farmer Satish Jagtap swears by the daily price and weather updates that he gets from Nokia’s new MajhaNokia service. It saves him time and money. But can he rely on those numbers? “I trust the brand. Nokia is the Hero Honda of mobile phones, reliable. I bought their mobile phone because of this service.”

A thousand kilometres away, Aircel is launching its mobile services in Delhi. Sandip Das, CEO of parent Maxis Cellular, is clear about focus on service. Aircel’s TV promo features Indian cricket captain Mahendra Singh Dhoni using his handset to do deals on Yahoo and MakeMyTrip. Dhoni never puts the handset to his ear. “Offering reliable data services is how we will distinguish ourselves from the pack,” says Das.

Concurs D. Shivakumar, MD, Nokia India, which controls about 65 per cent of the handsets market here. “It does not matter if the service does not make too much money, it helps me put my product in the consumer’s hand.” Across India, the mobile revolution is passé by now and is just a matter of tracking the millions. (By the time you will be reading this, the number of mobile subscribers in India will have crossed 400 million, making it the world’s second-largest market.) But this very growth has put the fear of commoditisation into the hearts of the players. They need a differentiator. That differentiator is services.

Sending an SMS to a special number or downloading callertunes. Accessing e-mail or Googling with your phone. All these are termed services.

Voice will certainly remain the main revenue generator for operators, who are expected to earn a total of Rs 1,50,000 crore in 2008-09. Of this, services or non-voice revenues—SMSes, data subscriptions, caller ring-back tones et al—will fetch “only” around Rs 10,000 crore. Yet, services will be the driver by which handset vendors and operators will try and rise to the top of a very cloudy mixture.

Rural raga, urban popNokia’s MeraNokia (Majha Nokia in Marathi) is actually a Nokia Life Tools (NLT) application coded into the 2300 and 2323 handsets being used in the pilot. Farmers and villagers pay around Rs 2 per day, every 10 days, for the latest on crop pricing, weather, farming tips, among other things. All this is freely available on the net for those with PCs and Internet access. For the farmers, the mobile is the PC.

Jagtap, a cereal farmer with a large landholding, explains that paying Rs 2 a day makes sense for him: “It saves me the hassle of making three, four, five phone calls that cost more, and occasionally even a bus journey. The prices are accurate …. But having health tips would be a nice touch.”

Jawahar Kantilal, Nokia’s Head for Emerging Market Services, is extremely bullish about these services. “The urban population is well represented in services, usually around the entertainment area,” says Kantilal. “The fastest growing market across India, Africa, China and Asia was in rural or non-urban areas and these subscribers needed unique services.”

He says entertainment is not the first concern of the rural consumer. The rural user wants to know: can the device help him in his livelihood?

“That is what we aimed at,” says Kantilal, who led the push for NLT. He says the Maharashtra pilot can be easily taken global, particularly in the next major growth area for mobility—sub-Saharan Africa. “People want…the device to improve their quality of life,” he says. And it isn’t just in rural areas that services are taking off. Ashok Thapa, a Delhi taxi-driver from Nepal who has spent the last decade in India, wonders why the mobile phone can’t be used for elections “just like how they vote in the singing contests on TV.” A liftman in a commercial building shows off his latest Samsung handset, which comes with the soundtrack of Aamir Khan’s Ghajini.

The mobile phone has moved from being a simple communication tool to an all-round entertainment and information device thanks to such services. “People will pay for a service which they find convenient and one that adds value to their device,” says Anshul Gupta, Principal Research Analyst for Mobiles at Gartner.

Balika Vadhu?

Information Services

Mobile Farmer

There could be problems for Mobile TV, because the rules around this are very fuzzy

Several rival technologies exist and one is even being piloted in Delhi (DVB-H)

Other systems where you can download and watch TV clips have had limited popularity

Broadcasters would also want a piece of the pie and make money off mobile TV

You can get everything from cricket scores to Bollywood gossip to random jokes with all these services costing between Rs 10-50 a month

These will be incremental revenues for all the operators and easily accessible by users, particularly the tech-savvy ones

The problem is that most of this information is available free for the users who know how to use the mobile Internet

Agricultural services may not be high-tech but can potentially be a big device sales driver

Farmers will get info on agricultural prices, local weather info based on their location

This service will also allow agri scientists to get crucial messages across to farmers on weather systems or practices

These services can be bundled with other services such as health tips, education (English learning) and entertainment (ringtones, videos, etc.)

Top quality Italian cheese is being produced in rural Haryana and Himachal Pradesh. Tejeesh N.S. Behl feeds on mozzarella, scamorza and other varieties to unravel the secret of this success.

60 MINUTES

Stephen Roach, Chairman, Morgan Stanley Asia, is widely recognised as one of the most seasoned economists in the world. Known for his bearish forecasts, Roach’s research covers a broad range of topics, with particular emphasis on globalisation and the emergence of China.

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